Article Contents
Article Contents

# Revenue congestion: An application of data envelopment analysis

• Congestion is generally used in the economics and indicates a situation where a decrease (increase) in one or more inputs can increase (decrease) one or more outputs. In this paper, we introduce a new concept using data envelopment analysis, and call it revenue congestion. The new concept implies a situation where reduction in some inputs may result in an increase in revenue. This improvement in revenue is rather possible by a simultaneous increase and decrease in outputs due to a reduction in inputs. Then, we try to propose a method to distinguish the revenue congestion and identify its sources and amounts. To illustrate the use of the proposed method, an empirical application corresponding to 30 Iranian bank branches is provided. 16 branches evidence revenue congestion via the proposed approach. This identification is very significant because these branches can increase the revenue of their outputs by eliminating the amounts of revenue congestion in each of their inputs. Moreover, it is found that an increase in all outputs is not always profitable, but rather in some cases a decrease in some outputs and an increase in some other outputs can help the firms to make more profits.
Mathematics Subject Classification: Primary: 90B50, 91B06; Secondary: 90C90.

 Citation:

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